Key takeaways from the conversation

1. Examine VCM and CAC Payback to assess the ROI of your promo strategy

You should be looking at your Variable Contribution Margin (VCM). If you’re positive by $6,000, then you have $6,000 more to spend on marketing. Then, you should look at your Customer Acquisition Cost (CAC) Payback to see how many orders you need before you make your money back. 

2.  Minimize sitewide promotions

Imagine you have a full-price customer, why are you showing them sale messaging? I used to be a full price shopper at Stuart Weitzman, but then they started inviting me to VIP secret sales, converting me from a full price to a discount shopper. 

3. Use AI for dynamic discounting

AI is everywhere right now: chatbots, merchandising, search, forecasting and demand planning… You should combine AI with dynamic pricing. It will tell you when to run a promotion and what to run the promotion on to really increase your profitability.

4. Get your inventory right first – then determine promotions

When we analyzed ModCloth customers, we saw that we were buying incorrectly across the board. We were overbuying the plus sizes and underbuying the small sizes. And the customers who are dress customers were different than the ones who buy skirts or pants. So, we realigned all of our size breaks.

5. Push bundles and promote cart specials to make promotions more profitable

You can upsell, cross-sell, and something that Justice does really well: ‘Shop the Look.’ They have a 3.3% higher conversion rate by showing ‘Shop the Look.’ They also deploy cart specials that you can unlock when your cart reaches a certain level.